Trade-Ideas LLC identified

Radian Group

(

RDN

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Radian Group as such a stock due to the following factors:

  • RDN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.1 million.
  • RDN has traded 59,578 shares today.
  • RDN is up 4.2% today.
  • RDN was down 8.1% yesterday.

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More details on RDN:

Radian Group Inc., through its subsidiaries, provides mortgage and real estate products and services in the United States. It operates through two segments, Mortgage Insurance, and Mortgage and Real Estate Services (Services). The stock currently has a dividend yield of 0.1%. RDN has a PE ratio of 1. Currently there are 5 analysts that rate Radian Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Radian Group has been 2.5 million shares per day over the past 30 days. Radian Group has a market cap of $2.3 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.28 and a short float of 4.2% with 2.24 days to cover. Shares are down 24.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Radian Group as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for RADIAN GROUP INC is rather high; currently it is at 57.42%. Regardless of RDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RDN's net profit margin of 21.16% compares favorably to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 25.64% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Thrifts & Mortgage Finance industry average. The net income has significantly decreased by 28.2% when compared to the same quarter one year ago, falling from $92.26 million to $66.25 million.

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